Tax for CMS licence holders/RFMC
Does a fund management company need to report under CRS?
A holder of a CMS license for fund management (as well as an RFMC) qualifies as an Investment Entity and thus a Reporting Singaporean Financial Institution.
However, an Investment Entity does not need to register with IRAS, if it only
(i) renders investment advice to a customer, and acting on behalf of that customer for the purpose of investing, managing or administering financial assets deposited in the name of that customer with another financial institution, and/or
(ii) manages portfolios for a customer, and acting on behalf of that customer for the purpose of investing, managing or administering financial assets deposited in the name of that customer with another financial institution
To the extent that the assets of the FMC's customers that the FMC is managing are custodised / booked with a bank in Singapore in the name of the customer, the FMC qualifies for this exemption. For example, an EAM simply manages the portfolios and acts on behalf of the customer for that purpose. An FMC that manages the assets of a separate fund entity, e.g. a variable capital company ("VCC"), similarly acts on behalf of the fund entity.
A Reporting Singaporean Financial Institution is also required to establish and maintain arrangements for due diligence in relation to all financial accounts that the institution maintains. Such financial accounts are, in case of an Investment Entity, any equity or debt interest in the financial institution. Commonly, the customer does not hold a debt or equity interest in the FMC
Usually, a FMC, therefore, does not need to maintain arrangements for or conduct due diligence for CRS purposes because it does not maintain any financial accounts itself. This obligation would fall on the bank or the fund entity.
Finally, a Reporting Singaporean Financial Institution must, once per year, report specified information in relation to every reportable account that the institution maintained during the previous calendar year (reg. 16(1) IT(ITCA)(CRS)R). Where the FMC maintains no financial accounts, the FMC has no reportable financial accounts.